The Evolution of Bank Boards of Directors in New York, 1840-1950

NBER Working Paper No. 20078Issued in April 2014NBER Program(s): CFDAE

Contemporary bank governance is criticized for manager-dominated (insider) boards of directors, but from the beginning of the nineteenth century, bank presidents appear also to have operated as chairmen of the boards of directors. However, the managers were constrained by a variety of rules that tended to align the interests of management, shareholders and other stakeholders until the mid-twentieth century. We trace this development through New York banking law and new data on banks chartered by the State of New York.